Electronic commerce (e-commerce, EC) describes the buying, selling, transferring or exchanging of products, services or information via computer networks, including the Internet.

Electronic Commerce: Definitions and Concepts

Electronic Commerce: Definitions and Concepts (cont.)

Pure vs. Partial EC depends upon the degree of digitization (the transformation from physical to digital) of:

1. the product (service) sold;

2. the process; and for

3. the delivery agent (or digital intermediary)

Brick-and-Mortar organizations are old-economy organizations (corporations) that perform most of their business off-line, selling physical products by means of physical agents

Electronic Commerce: Definitions and Concepts (cont.)

Virtual (pure-play) organizations conduct their business activities solely online

Click-and-mortar organizations conduct some EC activities, but do their primary business in the physical world

Advantages of E-commerce

Lower Cost Economy (no rental of physical store space,insurance and infrastructure

investment) Higher Margins (cost of processing a conventional ticket is $8 where as

e-ticket is of 1$) Better Customer Service Quick Comparison Shopping Productivity Gains (letting customer find their answer to technical

question – IBM) Teamwork Growth in Knowledge Markets (research on consumer behavior) Information Sharing, Convenience and Control Customization (DELL)

Technical Limitations of EC A few technical challenges remain for organizations wishing to

conduct EC: Lack of universally accepted standards for quality, security, and

reliability Insufficient telecommunications bandwidth Still-evolving software development tools Difficulties in integrating the Internet and EC software with some

existing applications and databases Need for special Web servers in addition to the network servers

(added cost) Expensive and/or inconvenient Internet accessibility for many

people

Non-Technical Limitations of EC Legal and economic concerns:

Lack of national and international regulations and standards Difficulty in measuring benefits of EC and justifying EC Insufficient number (critical mass) of sellers and buyers exists for

profitable EC operations

Cultural resistance: Distrust of the new: Many sellers and buyers are waiting for EC to

stabilize before they take part Customer resistance to the change from a physical to virtual stores Perception that electronic commerce is expensive and unsecured, so

many do not want even to try it

Classification of EC

business-to-consumer (B2C) : online transactions are made between businesses and individual consumers

business-to-business (B2B): businesses make online transactions with other businesses

consumer-to-business (C2B): e-commerce model in which individuals use the Internet to sell products or services to organizations or individuals seek sellers to bid on products or services they need

Classification of EC

consumer-to-consumer (C2C): e-commerce model in which consumers sell directly to other consumers

business-to-employees (B2E): e-commerce model in which an organization delivers services, information, or products to its individual employeese

e-learning: the online delivery of information for purposes of training or education

e-government: e-commerce model in which a government entity buys or provides goods, services, or information to businesses or individual citizens

E-Commerce Business Models Store-front model

Provides with product information, shopping cart, and online ordering mechanism

Provides good like books, computer and pizzas Merchant reaches customer directly

Click – And – Mortar model Combination of a web site with a physical store. Pre-establish brand name Using web site to promote physical store User and return defective items simply by going to store.

Service Provider Model Recovering the cost of processing through advertisement on

their website Yahoo…

Cont.. Built to Order Merchant Model

Offering goods or services and the ability to order customized versions.

Products are assembled individually and shipped to customer Subscription – Based Access Model

Visitor pays fixed fee per month for unlimited access to the service

Portal Site Model A portal offers one-stop access to specific content and services

like new, message broad and chat Allow visitor to personalized the interface and contents

Broker Model They bring buyers and sellers together and facilitate transaction

between them

Cont.. Virtual Mall Model

A site that hosts many merchant, service provider, brokers and other businesses

Act as as an intermediary between customers and the business it hosts by facilitating payment and guaranteeing a full refund if a merchant does not deliver in time

Virtual Community Model Website that attracts a group of user with a common interest

who works together on the site Sharing of information

Free Access Model Users are given something for free but with advertisement E-greeting

Electronic Business: Definitions and Concepts (cont.)

E-Business is any commercial activity conducted over networks linking electronic devices (typically computers). Often includes: Commercial transactions over the Internet, telephone, or fax; Electronic banking and payment systems; Trade in digitized goods or services; Servicing customers and collaborating with business partners;

and Procurement and inventory control.

E-business overview

CustomerCustomer Business supplieror partner

Business supplieror partnerBusinessBusiness

Consumer to consumerConsumer to consumer

Intranet

Business to consumerBusiness to consumer Business to businessBusiness to business

Extranet

BankBank

Intranet benefits Improved Communications

Keeps every employee informed and up to date Gives everyone (if they have permission) access to projects status,

team discussions, project collaboration tools, video conferencing, etc.

Document Access Provides easy access to documents employees need to perform

their jobs. Employee Training and Retention

Provides employees easy access to online training material, skill assessments, and other human resources content. This improves job satisfaction and employee retention.

Knowledge Retention Prevents knowledge loss which could occur as a result of

employees being unavailable for a while or leaving the company. New employees can get up to speed much easier.

Extranet benefits Sales Support Material

Provides business partners and customers online access to the latest sales support material from product manuals and data sheets to price lists and comparison charts.

Order Status Information Provides customers direct yet controlled access to the status of their orders,

freeing up the customer service staff to work on other issues. Employee Directories

Keeps partners informed as to the current staff assignments and contact information.

Inventory Status Gives business partners direct access to check inventory levels, back order

status, and shipping information. Knowledge Base Information

Provides easy access to frequently asked questions and customer support material. The information stored in this dynamic, knowledge base application could be made available to all partners/customers.

Toshiba’s Extranet Keeps Dealers on Time The Problem

dealers needed parts quickly The Solution

created a Web-based ordering entry system using an extranet

The Results reduces the cost per order reduces the networking cost of the Electronic Imaging

Division (EID) increases customer satisfaction

Intel Corporation Embracing the Web

The Problem slow, expensive, and frequently not up to date

distribution and communication process The Solution

established an e-business program using an extranet The Results

enhances competitive advantage by giving Intel’s customers better tools for managing transactions

brings substantial tangible savings

E-Business – example

Authormarketing

Authormarketing

Distributorinventory

Distributorinventory

Amazon.comsales

Information systemscoordination

contents

Amazon.comsales

Information systemscoordination

contents

Shippingtransporttracking

Shippingtransporttracking

Affiliatesales

Affiliatesales

Customerbuy

content

Customerbuy

content

Bankpayment

Bankpayment

deliver deliver

order

sale order

sales

critics

Credit cardclearance

returns

The Benefits of Electronic Business

Benefits to Customers Expands the marketplace to national and international

markets Decreases the cost of creating, processing, distributing,

storing and retrieving paper-based information Allows reduced inventories and overhead by facilitating “pull”

type supply chain management The pull type processing allows for customization of products

and services which provides competitive advantage to its implementers Reduces the time between the outlay of capital and the receipt of products and services

Supports business processes reengineering (BPR) efforts Lowers telecommunications cost - the Internet is much

cheaper than value-added networks (VANs)

Benefits to Customers Enables customers to shop or do other transactions 24 hours a

day, all year round from almost any location Provides customers with more choices Provides customers with less expensive products and services

by allowing them to shop in many places and conduct quick comparisons

Allows quick delivery of products and services in some cases, especially with digitized products

Customers can receive relevant and detailed information in seconds, rather than in days or weeks

Makes it possible to participate in virtual auctions Allows customers to interact with other customers in electronic

communities and exchange ideas as well as compare experiences

Benefits to Society Enables more individuals to work at home, and to

do less traveling for shopping, resulting in less traffic on the roads, and lower air pollution

Allows some merchandise to be sold at lower prices benefiting the poor ones

Enables people in Third World countries and rural areas to enjoy products and services which otherwise are not available to them

Facilitates delivery of public services at a reduced cost, increases effectiveness, and/or improves quality

Trends Driving e-Business Customer

Faster Service Self Service More product choice Product Knowledge

E-service Integrated sales and service Increases process visibility Convenient service delivery

Organizational Outsource Virtual distribution

Technology New wireless web application